Meaning the more strict requirements from either Freddie or Fannie get used in underwriting the loan. 

Hypothetically your rich uncle could loan you the money and secure it against the house legally, but he cant be engaged in that activity as a business without the proper license and without following some pretty strict rules.Very few HMLs are licensed to loan to owner occupants. 

Most experienced investors/rehabbers will have experience with negotiating code enforcement liens.

@Jami MortonWhen I read your post above, It sounds - please correct me if I am wrong - as if you have a pile of IRA money and are out investing without much education.There is much more to navigating the tax code related to using a self directed IRA than "can't be for personal use".I hope your custodian or advisor provided you with some introductory guidance as to the rules for self directed IRA plans and/or that you have a good CPA or attorney guiding you.Flipping with a self directed IRA can be very profitable, but is an advanced strategy.All IRA transactions must be entirely at arm's length, meaning you can negotiate and make decisions, sign contracts, and handle expense and income transactions, but may not benefit in any way OR add benefit to the IRA through the provision of goods or services.  

@Mehul Mehta, @Azam Khan - one observation is that you should not be limiting your focus strictly on single family.Have you thought about getting the economies of scale and investing in multifamily (apartments) via a syndication?

I am more risk adverse so I would not count on long term appreciation with a negative cash flow property especially in DC/NOVA...there is always a ceiling on how high the appreciation can go when you are already starting out with average home costs for a basic house that needs heavy cosmetic rehab funding on top of the over $350K - $450K house in an Ok area of DC/NOVA.I submitted a Freedom of Information Act (FOIA) request at the County Code Enforcement office and got a list of blighted (Vacant) and other code violation properties.  

Then as you pointed out, in a year or two you can convert the 4-plex into strictly a rental property and move on to the next deal.Rehabbing property is a lot of work.  

Here are the numbers:Purchase Price 89K2x 3/1.5 1220 Square feet eachFully Rented: Gross Rents 1300, 650 eachFully rehabbed Market Value, 97k (But I am suspect of this, can't find anything in research to justify this price)It is in the 46205 zip code "Historic Irvington".Is this a good neighborhood?

ALL Taxes, Code Violations and fines have been paidPurchase price would be about $26k, Seller claims to have $50k into property.

Justin:When Thomas asked about legal non-confirming, I do not believe he was implying your house is not compliant with building and fire codes, but was asking if it conformed to local zoning by-laws.We have student housing as well and it has been our experience that most university towns have occupancy by-laws limiting the number of un-related adults in a single dwelling unit (usually to 3 - 5) which are specifically aimed at student rooming houses.